Application Requirements For Rolling Forecasts Asmi 2

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ASMI Rolling Forecast Presentation 2010

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  • Application Requirements for Rolling Forecasts THANKS ANDREW!
  • Application Requirements for Rolling Forecasts LOOK FOR DEMO SIGN UPS!
  • Alight Planning Presentation Ben to do the intro. Self then partners. Then Rand. INTRODUCE RAND, Jeanette, Rhiannon, Al
  • Application Requirements for Rolling Forecasts We only have 45 minutes, but in fact, we have a 4-hour workshop on the topic of application requirements for rolling forecasts. So, the plan is to talk at a 30k foot view and get a bit closer to the topic, but we’re going to cover the 1 of the 3 core requirements in some detail so as to make this presentation somewhat concrete. However, the good new is: we’ll start with a “Why are we here” kind of message and hopefully get motivated to learn more since we will have plenty of follow-up materials available. Please ask questions, but not about Alight software. Catch us later for that. Let’s have some fun!
  • Ask the questions of the audience. When do you find your budget targets become obsolete? Unpredictability of the economy and competition: Need systems for making fast, well informed decisions: The old way to run a company– budgeting—isn’t working Need more immediate and responsive planning systems Need continuous planning to see patterns, trends, reality checks Companies moving toward making forecasting the primary management tool In fact, a survey by The Economist, 70% of financial directors of companies in Europe ranked planning and budgeting reform as their top priority. Planning needs to be: Event driven—e.g. new product launch; competitive threat Flexible—owned by local teams Updated based on the latest and best info More frequent and tighter updates to the plan Application Requirements for Rolling Forecasts
  • Budgeting is the primary problem with this slide which is that the process inherently takes too much time, has too much data and does not get the financial analyst leveraged so as to add value. Application Requirements for Rolling Forecasts
  • Application Requirements for Rolling Forecasts Talk to this slide
  • Application Requirements for Rolling Forecasts MOVE FAST ON THIS SLIDE
  • Application Requirements for Rolling Forecasts The framework we look at in the analysis of requirements for rolling forecasts is to start by analyzing how these requirements are met in spreadsheets, then with budgeting-only software packages, and the applications that are designed for planning. I get lots of calls from people looking for a budgeting software package and they say oh by the way it needs to work for forecasting. But perhaps the better question is I need a forecasting/planning package and it also needs to work for budgeting – or I’ve even seen we have a budgeting solution up and running, but now we need a tool for forecasting…
  • Application Requirements for Rolling Forecasts Everybody talks about “locking down” the budget. Forecast is more fluent, changing things.
  • Application Requirements for Rolling Forecasts Scenarios Address a Range of Forecasting Issues… Strategy development: testing alternate courses of action Address risk: test hi/lo ranges from a current trend Interventions: test new/different courses of action Address uncertainty: test the impact of specific events Understanding sensitivity: “what’s important”/actionable knowledge
  • Application Requirements for Rolling Forecasts What are the key scenarios that you need to evaluate in the short or longer term? What are the three most important decisions you need to make in the next twelve months.
  • Application Requirements for Rolling Forecasts Show any 2 scenarios not just “Forecast “versus BUDGET” but “Forecast 1 vs Forecast 2” Or even show 4 Forecasts “SIDE BY SIDE” Be able to show all levels of detail – drill down into multiple scenarios all at the same time to compare in real time
  • Application Requirements for Rolling Forecasts Change the price to $200 – CEO says do it for all scenarios The Kaiser Membership story – Alight didn’t do it but now it does
  • Application Requirements for Rolling Forecasts The NEW COLLABORATION: Not IT Collaboration but real management collaboration to make decisions TALK PLANET RX.COM DO THE KAISER CFO STORY
  • Application Requirements for Rolling Forecasts SKIP THIS SLIDE
  • Application Requirements for Rolling Forecasts NOTE THAT THIS IS THE FULL CHECKLIST BUT WE DID NOT COVER IT ALL
  • Alight Planning Presentation Ben to do the intro. Position as the high tech entrepreneur with finance credentials. Hit Pillar hard. Industry guru.
  • Application Requirements For Rolling Forecasts Asmi 2

    1. 1. Application Requirements for Rolling Forecasts By Alight Planning Ben Lamorte, VP Business Development Rand Heer, CEO Presented at ASMI Conference San Diego, CA April, 2010
    2. 2. <ul><li>2-Hour Video Workshop on Rolling Forecast Requirements </li></ul><ul><ul><li>Highlights of 4-Hour Conference Workshop </li></ul></ul><ul><ul><ul><li>http://www.alightplanning.com/Workshop/Requirements-for-Rolling-Forecasts/Video.html </li></ul></ul></ul><ul><li>Books and Websites </li></ul><ul><ul><li>Managing with Rolling Forecasts </li></ul></ul><ul><ul><ul><li>www.johnstretch.com/book/rollingForecast.html </li></ul></ul></ul><ul><ul><li>Future Ready </li></ul></ul><ul><ul><ul><li>www.futurereadybook.com </li></ul></ul></ul><ul><ul><li>Visit Our Website </li></ul></ul><ul><ul><ul><li>www.AlightPlanning.com </li></ul></ul></ul><ul><li>ASMI Private Demo </li></ul><ul><ul><li>Tuesday – Demo Room Reserved </li></ul></ul><ul><ul><li>To Sign Up, Contact Ben Lamorte </li></ul></ul>Resources for Rolling Forecasts
    3. 3. <ul><li>Ben Lamorte </li></ul><ul><li>Business Activities </li></ul><ul><ul><li>Vice President, Business Development, Alight Planning </li></ul></ul><ul><ul><li>Principal, Decision Consulting (Adobe, Kaiser) </li></ul></ul><ul><ul><li>Manager, Business Development, planetrx.com </li></ul></ul><ul><ul><li>Consultant, APM/CSC Healthcare </li></ul></ul>Today’s Speaker <ul><li>Publications </li></ul><ul><ul><li>Author of 2 technical research papers, American Mathematics Society </li></ul></ul><ul><ul><li>Co-author of planning white papers </li></ul></ul><ul><li>Education </li></ul><ul><ul><li>BS Math & Mechanical Engineering, University of California, Davis </li></ul></ul><ul><ul><li>MS degree Stanford University, Management Science and Engineering </li></ul></ul>
    4. 4. Requirements for Rolling Forecasts <ul><li>Today’s 45-Minute Agenda </li></ul><ul><ul><li>30k Foot: </li></ul></ul><ul><ul><ul><li>Why Rolling Forecasts? </li></ul></ul></ul><ul><ul><ul><li>Budgeting Vs Rolling Forecasts </li></ul></ul></ul><ul><ul><li>5k Foot View: </li></ul></ul><ul><ul><ul><li>Summarize Checklist #1: Scenario Analysis </li></ul></ul></ul><ul><ul><ul><li>Special Case Study: Rand Heer on Budgeting & Forecasting at Clorox </li></ul></ul></ul><ul><li>Not doing the 100-Foot View Today: In-Depth Analysis of Application Requirements for Rolling Forecasts </li></ul><ul><ul><li>Requirement #1: Scenario Analysis </li></ul></ul><ul><ul><li>Requirement #2: Driver-Based Modeling </li></ul></ul><ul><ul><li>Requirement #3: Integrated Actuals </li></ul></ul>
    5. 5. At what point do you expect your annual budget targets to become obsolete? SOURCE: Business Finance Magazine
    6. 6. SOURCE: APQC / BBRT Research How Much of Planning Adds Value?
    7. 7. Budgeting Rolling Forecasts Timing Frequency Once a year Often—event driven Cycle time Months/weeks Days/hours/near real time Time horizon Fiscal year Rolling; beyond “The Wall” ______________________________________________________________________________________________________________________ Process Iteration cycles One version at a time Multiple scenarios at one time Participants Many—all managers Fewer—finance; key managers Collaboration Submission/approval Near real time as possible Deliverables Reports in binders Decisions; action __________________________________________________________________________________________________________________________________ Data Type Financial Financial & operational Inputs Many direct inputs Fewer direct; driver-based Measurement Variances Relative change; trends Level of detail Precision driven Relevant; what’s material Budgeting Vs Rolling Forecasts
    8. 8. <ul><li>Robust Scenario Analysis </li></ul><ul><ul><li>You can’t predict the future, especially in today’s economy </li></ul></ul><ul><ul><li>But you can construct scenarios that let see alternate futures </li></ul></ul><ul><ul><li>You can evaluate best courses of action under different conditions </li></ul></ul><ul><li>Driver Based Modeling </li></ul><ul><ul><li>Reduce direct input data volumes </li></ul></ul><ul><ul><li>Increase ‘modeled elements’—operational/driver based planning </li></ul></ul><ul><li>Integrating Actuals </li></ul><ul><ul><li>“ Rolling over” actuals in plan files—apples to apples </li></ul></ul><ul><ul><li>Using actuals to understand trends—focus on rates </li></ul></ul><ul><ul><li>Using actuals as an activity driver/source for plan data </li></ul></ul>3 Key Requirements for Rolling Forecasts
    9. 9. <ul><li>Scenarios In Spreadsheets </li></ul><ul><ul><li>Separate workbooks is the principal mechanism </li></ul></ul><ul><ul><li>A nightmare for maintenance & comparisons </li></ul></ul><ul><li>Scenarios In Budgeting Applications </li></ul><ul><ul><li>Manage to budget versions– aka “version control” </li></ul></ul><ul><ul><li>Process control: who changed that number? what’s approved? </li></ul></ul><ul><ul><li>Compare versions at the product/cost center/account level </li></ul></ul><ul><li>Scenarios In Planning Applications </li></ul><ul><ul><li>Reporting functionality </li></ul></ul><ul><ul><li>Maintenance issues </li></ul></ul><ul><ul><li>Performance [meeting the “need for speed”] </li></ul></ul>Requirement #1: Robust Scenario Analysis
    10. 10. <ul><li>Versions Are For Budgeting </li></ul><ul><ul><li>Create and approve one version at a time </li></ul></ul><ul><ul><li>Version control: who changed that number? what’s approved? </li></ul></ul><ul><ul><li>Once a new version is approved, prior versions are discarded </li></ul></ul>Scenarios Are Different from Versions X X Budget Version A Budget Version B Budget Final
    11. 11. <ul><li>Forecasts = Scenarios (lots of them!) </li></ul><ul><ul><li>Assessing risk—BE/Hi/Low ranges </li></ul></ul><ul><ul><li>Evaluating alternative strategies/programs </li></ul></ul><ul><ul><li>Managing uncertainty— external events </li></ul></ul><ul><ul><li>Actionable knowledge/decisions </li></ul></ul><ul><ul><ul><ul><li>Go/no go decisions on programs </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Reallocate resources </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Change underlying processes </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Manage timing </li></ul></ul></ul></ul>What You Can Do with Scenarios
    12. 12. “ Be Prepared” “ Develop Situational Awareness” The Goal: Be Prepared
    13. 13. <ul><li>What are the three scenarios that your company needs to be analyzing now as part of your planning process? </li></ul><ul><li>What are the three most important decisions your company will be making over the next 12 months? </li></ul>Questions about Scenarios
    14. 14. <ul><li>Reporting functionality checklist: </li></ul><ul><ul><li>Compare any two scenarios side by side with variances </li></ul></ul><ul><ul><li>Compare any two scenarios with variances at all levels of detail </li></ul></ul><ul><ul><li>Line up scenarios side by side at all levels of detail </li></ul></ul><ul><li>Examples </li></ul>Scenario Analysis: Reporting
    15. 15. <ul><li>Maintenance issues </li></ul><ul><ul><li>Cumbersome maintenance results in errors </li></ul></ul><ul><ul><li>Time consuming maintenance kills the use of scenarios </li></ul></ul><ul><li>Maintenance checklist </li></ul><ul><ul><li>Create a new scenario by copying any existing scenario </li></ul></ul><ul><ul><li>Make value changes across scenarios in one operation </li></ul></ul><ul><ul><li>Make structure changes across scenarios in one operation </li></ul></ul><ul><li>Examples </li></ul>Scenario Analysis: Maintenance
    16. 16. <ul><li>Communicating the model in real time </li></ul><ul><li>The new “collaboration” </li></ul>The Excel PowerPoint Cycle The Need for Real Time
    17. 17. <ul><li>The “need for speed” </li></ul><ul><ul><li>Everything refreshes in near real time </li></ul></ul><ul><ul><li>The planning tool is the presentation tool </li></ul></ul><ul><ul><li>The planning tool enables collaboration on-the-fly </li></ul></ul><ul><li>Performance checklist </li></ul><ul><ul><li>Change values of a scenario with ripple through in real time </li></ul></ul><ul><ul><li>Change dimension filters with ripple through in real time </li></ul></ul><ul><ul><li>Toggle between scenarios in seconds </li></ul></ul><ul><ul><li>Update scenarios for structure changes in seconds or minutes </li></ul></ul>Scenario Analysis: Performance
    18. 18. <ul><li>Scenario Analysis Checklist </li></ul><ul><li>Scenarios have comparative reporting: </li></ul><ul><ul><li>Compare any two scenarios side by side with variances </li></ul></ul><ul><ul><li>Compare any two scenarios with variances at all levels of detail </li></ul></ul><ul><ul><li>Line up scenarios side by side at all levels of detail </li></ul></ul><ul><li>Scenarios are easy to create and maintain: </li></ul><ul><ul><li>Create a new scenario by copying any existing scenario </li></ul></ul><ul><ul><li>Make value changes across scenarios in one operation </li></ul></ul><ul><ul><li>Make structure changes across scenarios in one operation </li></ul></ul><ul><li>Application meet “need for speed” for scenario analysis: </li></ul><ul><ul><li>Change values of a scenario with ripple through in real time </li></ul></ul><ul><ul><li>Change dimension filters with ripple through in real time </li></ul></ul><ul><ul><li>Toggle between scenarios in seconds </li></ul></ul><ul><ul><li>Update scenarios for structure changes in seconds or minutes </li></ul></ul>Complete Checklist: Scenarios
    19. 19. <ul><li>Rand Heer </li></ul><ul><li>Business Activities </li></ul><ul><ul><li>CEO, Alight Planning (Planning software) </li></ul></ul><ul><ul><li>Co-Founder, Aspirity (Microsoft BI consulting) </li></ul></ul><ul><ul><li>Founder, FP&A Train (Essbase training) </li></ul></ul><ul><ul><li>Founder, Pillar Corporation (Enterprise budgeting) </li></ul></ul><ul><ul><li>CFO/Finance Director for 2 public companies </li></ul></ul>Today’s Special Speaker <ul><li>Publications </li></ul><ul><ul><li>Coauthor: “Business Intelligence: Making Better Decisions Faster” </li></ul></ul><ul><ul><li>Author of 10 white papers on planning/reporting topics </li></ul></ul><ul><li>Education </li></ul><ul><ul><li>MBA degree Harvard Business School </li></ul></ul>

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